Block Earner has avoided punishment from the regulator’s crypto profit suit
An Australian federal court has acquitted fintech company BlockEarner of fines for offering a crypto-yielding product without a financial services licence.
Judge Ian Jackman ruled on June 4 that Block Earner had “worked in good faith” and that Profitable Earner had intended to obtain a license when the product was launched, but concluded that the research and legal advice required none.
BlockEarner founder and CEO Charlie Karaboga told Cointelegraph that getting legal advice before launching the product “shows that we've worked with integrity and done everything we can as a startup.”
He refrained from calling it a “fair verdict” – the only “silver lining” being that he didn't have to pay a fine. According to Karaboga, the company still suffers “reputational damage” from the case and has “lost a lot of money” in legal fees over the past two years.
Judge Jackman asked the Australian Securities and Investments Commission (ASIC) for a fine of $234,000 (A$350,000). Block Earner is seeking a fine of $40,000 (A$60,000) – three times the amount it makes from the product it was charged with.
ASIC is reviewing the decision in a press release on June 4.
In February, Judge Jackman ruled that the 2022 blockchain “earner” products — offering yields on loans in USD Coin (USDC), Bitcoin (BTC), Ether (ETH) and PAX Gold (PAXG) — required Australian financial services. License (AFSL).
The company's “DeFi Access” product – which facilitates the use of the lending protocol Aave – escaped punishment because the court found that it does not work in a managed investment scheme, so AFSL is not required.
Related: Australian court rules on 4 lawsuits against Qoin issuer BPS Financial
ASIC sued BlockEarner in November 2022, saying both its Annuity and Defy Access products require a license because they are managed investment schemes – where a fund pools investors' money and uses it to buy assets.
The Earner product will run from March 17, 2022 to November 16, 2022 after Block Earner ends before the court proceedings.
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Additional reporting by Felix Ng.
